A survey conducted by the Federal Reserve Bank of Boston in 2010 reported that more than 600 million payment cards were held by U.S. consumers. As the number of payment cards has increased, the fraudulent use of stolen payment cards has also increased. Surveys have shown that the theft of payment card information is one of the greatest fears of consumers and in 2008 alone payment card fraud was estimated to be over $48 billion. Typically, merchants do not require a payment card user to provide identification and often a thief can use a stolen payment card to make purchases until the cardholder reports the theft to the payment card issuer. In the short time between the theft of a payment card and the report to the issuer, a thief can make purchases amounting to thousands of dollars.
Payment card issuers have implemented numerous programs in an attempt to minimize losses from the illegal use of stolen payment cards without inconveniencing consumers. Therefore, a threshold level of suspicious purchases must be identified before the payment card issuer blocks the use of a payment card. As a result, there is usually a time lag in payment card fraud prevention methods between the first unauthorized payment card transaction and when the issuer blocks the use of a payment card account. Shortening this time lag by early identification of fraudulent payment card transactions could save payment card issuers billions of dollars. Accordingly, there is a need for a method to provide payment card security by detecting fraudulent transactions before the cardholder realizes a payment card has been stolen and reports the theft to the payment card issuer, without requiring registration or data collection from the cardholder.